Health Care Reform: Proposals Prospects

1. Health Care Reform:Proposals & Prospects Roy Ramthun, Visiting Fellow Council for Affordable Health Insurance March 8, 2009 I know that many of your clients � and maybe you too � have taken a �wait and see� approach to HSAs. How many of you think your clients: have ruled out offering an HSA completely? would like to offer an HSA but don�t think their employees can handle the responsibility? are afraid to offer an HSA for fear of employee backlash? can�t get over the complexity to feel confident to explain? You�re not alone! You don�t need to worry about asking �dumb questions.� Lots of people think they�re experts but they�re not. I�m going to address some of these issues today. And I�ve been working with Fred Hunt and Anne Lennan since the beginning.I know that many of your clients � and maybe you too � have taken a �wait and see� approach to HSAs. How many of you think your clients: have ruled out offering an HSA completely? would like to offer an HSA but don�t think their employees can handle the responsibility? are afraid to offer an HSA for fear of employee backlash? can�t get over the complexity to feel confident to explain? You�re not alone! You don�t need to worry about asking �dumb questions.� Lots of people think they�re experts but they�re not. I�m going to address some of these issues today. And I�ve been working with Fred Hunt and Anne Lennan since the beginning.

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3. 3 �Today I want to lay out the details of that plan � a plan that not only guarantees coverage for every American, but also brings down the cost of health care and reduces every family�s premiums by as much as $2,500.� -- Barack Obama, Speech in Iowa City May 29, 2007

4. 4 What Will Reform Look Like? �Total healthcare spending would increase by $122.6 billion to $208.6 billion if uninsured were fully covered.� -- Health Affairs, Jack Hadley et al, Urban Institute, August 25, 2008

5. 5 What Will Reform Look Like? Is there any money left? $700B spent on financial services industry $800B Economic Stimulus law $400B Omnibus Appropriations bill Slow economy will likely lead to increased: Spending on Medicaid, unemployment, and other welfare benefits Focus on health care costs Focus on people who lost coverage COBRA subsidies in Economic Stimulus plan

6. 6 What Will Reform Look Like? President Obama�s plan Outline released Feb. 26 (in Budget outline) More details may be released when Budget is officially presented to Congress in April Sets aside a reserve fund of at least $630 B over 10 years that will be dedicated to financing health reform efforts, financed by: Reducing itemized deductions for families with annual incomes > $250,000 ($318 B) Specific health care savings ($316 B) Sen. Baucus: �I think we need to look first for resources within the existing health care system. I encourage the Administration to dig down deeper with the health care system to find savings.�

7. 7 What Will Reform Look Like? President Obama�s plan Specific health care savings come from: Reducing payments to private insurers providing Medicare Advantage plans ($177 B) Reducing Medicare home health payment ($37 B) Increasing Medicaid drug rebates ($20 B) Reducing Medicare payments for hospital re-admissions ($18 B) Expanding the Medicare hospital quality improvement program ($13 B) Encouraging generic versions of biologic drugs ($9 B) Reducing fraud and abuse in Medicare ($2 B) Reducing Medicare payments for imaging services ($2 B) Reforming the Medicare physician payment system Support comprehensive but fiscally responsible reform to formula

8. 8 What Will Reform Look Like? President Obama�s 8 Principles for Reform Reduce cost and protect people from bankruptcy Reduce waste and inefficiency Put us on a clear path to cover all Americans Provide portability of coverage, reduce �job lock� and guarantee issue of insurance coverage Guarantee choice of physicians and insurance plans (including keeping employer-based plan) Invest in prevention and wellness Improve patient safety and quality care (HIT & CER) Maintain long-term fiscal sustainability

9. 9 What Will Reform Look Like? Pay attention to detailed plans of: Sen. Baucus Sen. Kennedy Sen. Wyden (S. 391) Rep. Rangel/Stark Rep. Waxman/Dingell Timing Hearings already underway Baucus will hold a series of public �roundtables� and private �walk-thrus� of the legislation, starting in late April Sen. Baucus hopes to begin to mark up the legislation in June to allow a Senate floor vote in July Waxman said he hopes for a floor vote before the start of the August recess

10. 10 What Will Reform Look Like? Baucus plan (white paper) Modeled largely after Massachusetts Play or pay mandate on employers Tax credit for small businesses Individual mandate Subsidies based on income National Health Insurance Exchange Guaranteed issue with no pre-existing conditions Expands Medicaid and SCHIP eligibility Allows buy-in to Medicare for people 55-64

11. 11 What Will Reform Look Like? Sen. Baucus is considering limiting the amount of employer-sponsored health insurance that is tax-free Sen. Baucus plans to divide the legislation into three areas: Improvement of health care delivery �How we pay for what we get should be the driver of reform� Expansion of health insurance Reduction of health care costs �Physician payments should be based on the quality of care provided� Sen. Baucus plans to move legislation in a bipartisan manner (doesn�t plan to use budget reconciliation process)

12. 12 What Will Reform Look Like? Wyden plan (S.391) 13 bipartisan co-sponsors Individual mandate Insurance would be owned by the employee (not the employer) and would be completely portable between jobs Guaranteed issue with no pre-existing conditions Subsidies based on income Employer-provided health insurance would become a taxable benefit Every insured family would be provided with a $17,000 standard tax deduction

13. 13 What Will Reform Look Like? Other areas of potential consensus Comparative effectiveness system in Economic Stimulus bill Health IT in Economic Stimulus bill Medicaid/SCHIP expansion (cover more kids) P.L. 111-3 signed by President Obama Disease management Pay for quality Prevention

14. 14 What Will Reform Look Like? House leaders will likely insist on a new Government-run health insurer that could compete with private insurers Will likely begin with Medicare expansion to pre-retirees Will likely require subsidies due to adverse selection Could potentially double the number of people subject to Medicare fee schedules and quality reporting Sen. McConnell sent a letter to President Obama this past week opposing a government-run plan

15. 15 What Will Reform Look Like? A lot depends on whether the Senate can pass a bill GOP Senators could vote to block legislation and force things to be done on a bipartisan basis House has rules and majority on its side (can do anything it wants) Leadership and Committee chairs much more liberal than general membership

16. 16 Final Thoughts Past attempts at �health care reform� have all failed One party control of Congress and White House does not guarantee success Clinton mistakes will not be repeated Daschle departure will slow things down Medicare becomes more important as the year goes on (e.g., SGR fix) Obama will likely sign any plan Congress gives him Health Savings Accounts have 2 parts: 1. A health insurance policy that covers major medical expenses and preventive care; and, 2. A tax-free savings account for routine medical expenses If you haven�t heard of HSAs, they are relatively new. HSAs were created in the Medicare legislation signed into law by President Bush on December 8, 2003. HSAs have been available since 2004. You may have heard of Medical Savings Accounts, or MSAs, where available on a limited basis before 2004.Health Savings Accounts have 2 parts: 1. A health insurance policy that covers major medical expenses and preventive care; and, 2. A tax-free savings account for routine medical expenses If you haven�t heard of HSAs, they are relatively new. HSAs were created in the Medicare legislation signed into law by President Bush on December 8, 2003. HSAs have been available since 2004. You may have heard of Medical Savings Accounts, or MSAs, where available on a limited basis before 2004.

17. 17 Contact Info Roy Ramthun, Visiting Fellow Council for Affordable Health Insurance eMail: rramthun@cahi.org Phone: (202) 747-4467